Overlapping generations model: Difference between revisions

Revision as of 15:40, 21 March 2014

Revision as of 20:10, 11 November 2014

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*Labor and capital markets are perfectly competitive and the aggregate production technology is CRS, Y = F(K,L).

In Diamond's version of the model, individuals tend to save more than is socially optimal, leading to dynamic inefficiency. Subsequent work has investigated whether dynamic inefficiency is a characteristic in some economies and whether government programs to transfer wealth from young to poor do reduce dynamic inefficiency.<ref name="Mankiw89">{{cite news|author1=N. Gregory Mankiw|author2=Lawrence H. Summers|author3=Richard J. Zeckhauser|title=Assessing Dynamic Efficiency: Theory and Evidence|accessdate=13 May 2012|date=1 May 1989|journal =[[Review of Economic Studies]] | volume = 56| pages = 1–19 | doi = 10.2307/2297746 | issue = 1}}</ref> and whether government programs to transfer wealth from young to poor do reduce dynamic inefficiency{{Citation needed}}.

==See also==